LAING: On land law. Topics: 1. Licences 2. Leasehold Interests 3. Strata Title 4. Native Title 5. Boundaries 6. Easements 7. Mortgages 8. Co-ownership 9. Covenants 1. Licences: Licence: 1. A permission, usu. Revocable, to commit some act that would otherwise be unlawful; esp., an agreement (not amounting to a lease or profit a prendre) that it is lawful for the licensee to enter the licensor s land to do some act that would otherwise be illegal, such as hunting game. 2. The certificate or document evidencing such permission 1. Nature of a licence 2. Bare or gratuitous licence? 3. Contractual licence - Binding on subsequent owners? - Revokable? 4. Licence coupled with an interest 5. Distinction from leases 1. Nature of a licence: - An authority which prevents the person to whom it is granted becoming a trespasser to land. - It is a limited personal permission Page 1
2. Bare or Gratuitous: A licence in which no property interest passes to the licensee, who is merely not a trespasser. It is revocable at will. eg permission to play softball on a paddock Three features: a. they are not assignable (you cannot give the licence to anyone else) b. they can be revoked at any time (At leisure of owner; must give reasonable time to leave) c. they do not bind successors in title (I.e. to new owner of the land) Lincoln Hunt Australia Ltd v Willesee (1986): normally an implied license to enter property and to knock on door for lawful reason (e.g. travelling salesperson) 3. Contractual Licences: Licences created by contract for valuable consideration for a particular time or duration (i.e. theatre tickets). Issues that may arise: (i) Binding on third parties? (ii) Ability of grantor to revoke? Is a contractual licence a proprietary (property) interest? Property interests are generally: Alienable Binding on successors Protected by remedies Irrevocable Ashburn Anstalt v Arnold (1989) HELD: Despite no rent having been paid from the vendor to the purchaser, a lease was created which as therefore binding on subsequent purchasers because a lease creates a proprietary right. There is no serious doubt that a contract is not binding even if sub purchaser has notice of licence. Errington v Errington (1952) HELD: Notice of licence from purchaser that would make a licence binding on sub purchaser (separate position including a constructive trust) Page 2
Revocation (Contract revocable?) Cowell v Rosehill Racecourse Co. Ltd. HELD: License was contractual, not proprietary and therefore revocable though improper revocation at law P was not entitled to recover in tort in respect to his forcible expulsion. Any remedy in contract does not include damages for the assault. The licence remained revocable at law notwithstanding any breach of contract. [A] patron of a pulic amusement who pays for admission obtains by the contract so formed and by acting on the licence it imports no equity against the subsequent recovation of the licence and the exercise by the proprietor of his common law right of expelling the patron (per Dixon J) P sued for damages for assault after being ejected from D s racecourse. D sought to justify the assault on the basis that it was a lawful exercise of force for the purpose of removing P from the racecourse after P refused a request to leave. P alleged that, having paid valuable consideration (the admission price) D contracted to allow P on the course to view the races and was not entitled to revoke P s license to do so. Remedies: damages (i.e. return of entry fee) Because it wasn t proprietary there was no access to specific performance or injunction on revocation of license plaintiff became a trespasser and removal without undue force not assault - note Evatt dissent 4. Licences coupled with interest: E.g. Sale of timber to be felled with licence to remove. Is a proprietary interest Is irrevocable E.g. a profit a prendre (which can be registered under s. 97 E- M Land Title Act) has to be a part of the land not produce, etc. But will retain all the benefits of indefeasibility under the LTA. 5. Distinction between a licence and a lease: 1. A lease involves the legal right to exclusive possession - A licence does not. 2. A mere licence will not give rise to a proprietary interest while a lease will. 3. The holder of a lease can resort to protective provisions of the PLA a licensee cannot. 4. A lease can be enforced against a third party (i.e. a leaseholder can bring an action for recovery of possession a licence holder can only enforce the terms of the licence against those a party to the contract). 5. A lease can be registered under the LTA a license cannot. Page 3
Leases Lessor/Landlord: Lessee/Tennant: Leasehold reversion Personal interest in land Leasehold Reversion: If the landlord sells the fee simple estate in the property during the term of the lease, the purchaser is the assignee of the reversion. The tenant may also dispose of his possessory interest to a third party before the expiry of the lease, either by an assignment or a sublease. Careful attention must be given to the basic distinction between these terms. If the tenant disposes of the whole of her or his interest, the tenant will be held to have assigned the interest, notwithstanding that the conveyance may be described as a sublease. Topics Covered: 1. What is a lease definition; terminology and essential elements 2. Exclusive possession 3. Certainty of term 4. Types of leases 5. Proper Creation of Leases 6. Informal Leases Equitable leases 7. Rights and Duties of Landlord and Tenant at common law; in contract and statute including quiet enjoyment; non derogation from grant; waste; payment of rent; repair 8. Assignments of leases and landlords reversion 9. Forfeiture and other means of bringing lease to an end 10. Retail Shop Leases Act What is the nature of a leasehold interest? Leasehold interest: 1. LEASEHOLD; esp., for purposes of eminent domain, the lessee s interest in the lease itself, measured by the difference between the total remaining rent and the rent the lessee would pay for similar space for the same period. The relationship of landlord and tenant arises whenever one person either a landlord or lessor confers upon another person a tenant or lessee the legal right to: 1. The exclusive possession of certain land for a period less than for which the landlord holds the land 2. The term of that lease is certain or capable of being made so Page 4
Some terminology: Leasehold Page 6
What are the essential elements of a lease? 1. Tenant must be granted legal right to exclusive possession 2. The term must be for a definite period or periods capable of being made certain 3. The lease must be in appropriate form Equity may enforce a lease Exclusive Possession: Exclusive Possession: The exercise of exclusive dominion over property, including the use and benefit of the property. Errington v Errington (1952) 1 All ER 149 - Denning considered exclusive possession was not decisive test rather intention of the parties - If intention to create personal privilege then licence only created notwithstanding exclusive possession granted Raidach v Smith (1959) 101 CLR 209 HELD: Whether an instrument creates a lease, as opposed to a mere licence, depends upon the intention of the parties. If the instrument purports to grant the lessee an exclusive right to possession of the premises for a term, a leasehold interest is created (Addiscombe Garden Estates v Crabbe [1958] 1 QB 513). Here, despite the labels of licensor and licensee used by the parties, overall, the terms and language of the deed were consistent more with it being a tenancy agreement, than a mere licence. Test: 1. Legal right to exclusive possession 2. Words used to describe lease irrelevant look to the document and its construction Smith by a deed granted to Raidach the sole and exclusive licence to sell refreshments and run a milk bar on Smith s premises for five years. Raidach paid a weekly rent in advance to Smith. The deed described Smith and Raidach as licensor and licensee respectively. The issue before the court was whether the deed created a lease (which would bring it within the fair rent provisions of the Landlord and Tenant (amendment) Act 1948-54 (NSW), or a mere licence. Licence for 5 years which provided for: the sole and exclusive licence and privilege to supply refreshments to the public from a lock up milk bar. Lewis v Bell (1985) 1N.S.W.L.R. 731 Exclusive possession is - the general right to exclude others, including the lessor, from the premises, subject at least to such specific provisions for entry as maybe particularly provided in the document Where unclear if exclusive possession granted look at? - nature of rights granted Page 7
- intention of the parties Exclusive possession relevant tests: It is not what parties intended but the effect in law of the rights ultimately created I.e. what are the rights enjoyed? A matter of substance not form KJRR Pty Ltd v Commissioner of State Revenue [1999] 2 VR 174 OBITER: Don t be too quick to disregard the terms, what the parties intended, in plain and ordinary language. Features that may indicate Lease: Power to inspect vested in landlord (i.e. tenant has exclusive possession) Quiet enjoyment covenant (i.e. landlord should leave tenant alone) Features that may indicate not a lease: Occupier not to impede grantor s possession (Not exclusive possession) Grantor has right to use in common with grantee (Not exclusive possession) o right of landlord to move tenant within premises (Different w/ shopping centre leases) o informality in documentation (Might tend to suggest a license) Factual exclusive possession and legal right: IMPORTANT: Must establish entitlement to exclusive possession. Distinguish between the fact of exclusive possession and the right to exclusive possession - the former is not sufficient to create a lease. The parties may conduct their legal legal relationship as if exclusive possession is given though there may be no entitlement to it. Leases: Exclusive possession The area over which exclusive possession is granted must be certain based upon the description of the leased area in the lease document. It may not be sufficient if the description is only capable of ascertainment by a surveyor or other expert by reference to material extrinsic to the lease. Page 8
Did exclusive possession test survive the Wik decision? Brennan CJ: In minority a true lease confers on the lessee a right to exclusive possession, albeit that right might be subject to particular reservations or exceptions. p144 ALR Toohey J: In majority: Certainly the authorities point to exclusive possession as a normal incident of a lease. They do not exclude, however, an inquiry whether exclusive possession is in truth an incident of every arrangement which bears the title of lease. p178 ALR There must be certainty of term: Must be certainty in : a. date of commencement (before lease starts) b. duration Lace v Chantler [1944] K.B. 368 HELD: The tenancy, which was expressed to be for the duration of the war, did not constitute a good leasehold interest because the term was uncertain when the agreement took effect. It was impossible to construe the tenancy as a leasehold interest for a period of 99 years, determinable on the cessation of the war. Furnished for the duration unenforceable as lease must be certain in its term or expressed so that term can be ascertained at time lease takes effect Bishop v Taylor 1968 118 CLR 518 Lease for term until the end of peanut crop or harvesting period unenforceable lacked certainty. Prudential Assurance Co Ltd v London Residuary Body [1992] 3 WLR 279 HELD: If maximum term specified it is acceptable that the lease permits agreement to be terminated prior to that date i.e. giving right to terminate on notice. - Lease until the land is required for the purpose of road widening - Unenforceable insufficiently certain Fixed term: Fixed-term leases, or leases for a term of years, may only be created expressly. Unlike periodic leases, they are never implied by operation of law. Fixed-terms leases may be of any length, provided that at the time the agreement is entered into, the exact date of termination is either known or ascertainable by the parties. This is known as the rule in Lace v Chantler. Page 9
Smallwood v Sheppards [1895] 2 Q.B. 627 HELD: A lease for three successive public holidays is valid. It is not inconsistent with the nature of a fixed term lease to provide for its possible determination prior to the effluxion of the term. Leases in Possession and Reversionary leases: Lease in possession: Where lease from possession or from past date E.g. lease dated 2 June with term from 30 May - lease in possession Reversionary lease: lease to commence at future date or at end of prior lease lease dated 10 April to take effect on the 15 April- future or reversionary lease PLA S. 102(3): lease must commence within 21 years of instrument otherwise it is void. (fixed term will be either a lease in possession or reversionary lease) Periodic Tenancies: A tenancy that automatically continues for successive periods usually month to month or year to year unless terminated at the end of a period by notice. A typical example is a month-tomonth apartment lease. This type of tenancy originated through court rulings that, when the lessor received a periodic rent, the lease could not be terminated without reasonable notice. Express Periodic Tenancies: By express agreement in a deed By oral agreement when tenant agrees to pay rent weekly, fortnightly where no fixed term. Implied or imputed period tenancy: entry into fixed term pays rent and lease is invalid o (may be fixed term in equity and periodic tenancy at law) where fixed term expires and tenant pays rent in over hold period where agreement for periodic tenancy based upon implied agreement - entry into possession and rent on lease on vague and uncertain terms To determine length of successive terms consider: 1. Implied intention of the parties 2. If this is not evident it is based upon periods on which rental is paid (i.e. weekly rental would suggest weekly periodic tenancy) Page 10
Week 2: Types of Leases continued Brisbane City Council v Council Club: HELD: Express agreements outside s129: even if some agreement can be implied does not displace common law presumption here within standard situation where yearly tenancy imputed (i.e. vague and uncertain terms) once club entered possession and paid rent on yearly rental presumption applied - subsequent events which might have suggested implied agreement for yearly to year lease did not rebut this presumption - s129 applied. Club let into possession for $100 pa plus %of profit - no formal lease never signed - BCC later claimed full commercial lease rental - s129 notice to terminate given by landlord - tenant paid $100 and BCC accepted by error Was s129 applicable? Did payment of $100 mean another year granted? Club said s129 did not apply as their lease was implied not imputed Palmdale Insurance v Sprenger (1988) 1 QR 414 HELD: Connolly J concluded that entry into possession and payment of rental created a tenancy in terms of the void lease in all respects except the duration. - at common law a yearly periodic tenancy was created allowing termination by s129 notice. The term of lease not enforceable if invalid lease. However, if parties enter into agreement they must fulfill obligations under contract. Shopping centre lease entered into without ministerial consent and thereby invalid. Types of leases and tenancies (continued ) Tenancy at will Can occur by express agreement but often implied at law. A tenancy at will arises whenever the tenant enters or remains in possession of property with the consent of the landlord without paying rent. Thus, it may rise when the tenant enters into possession while the parties are still negotiating the terms of a lease. A tenancy at will also arises when a tenant under a formally invalid lease enters into possession or when a fixed-term lease expires and tenant remains in possession with the express permission of the landlord. In both cases, the payment of rent by the tenant and its acceptance by the landlord will convert the tenancy at will into a periodic lease. When a person with the consent of the owner occupies land as tenant on terms either may terminate on notice. Fragile - will become periodic tenancy on rent being paid - determinable on reasonable notice PLA s. 137 non assignable, determined by death. Page 12